FOX Fox Corporation

By Joe Flint 

Roger Ailes stepped down as Fox News Channel's chairman and chief executive in the wake of a sexual-harassment scandal, bringing an abrupt end to his 20-year tenure and raising questions about how the cable news powerhouse will adapt to a new era.

Fox News parent 21st Century Fox Inc. announced Mr. Ailes's resignation in a statement Thursday and said 21st Century Fox Executive Chairman Rupert Murdoch would take on the role of Fox News chairman and acting CEO.

The departure of Mr. Ailes comes just over two weeks after former Fox anchor Gretchen Carlson filed a lawsuit alleging that Mr. Ailes retaliated against her and sabotaged her career because she complained about a hostile work environment at the network and rebuffed his advances.

Mr. Ailes has denied the allegations. Fox hired a law firm to investigate, and the probe has revealed a pattern of inappropriate behavior toward female staffers, people familiar with the matter said.

21st Century Fox and Wall Street Journal-owner News Corp were part of the same company until mid-2013. Mr. Murdoch also is executive chairman of News Corp.

In his letter of resignation, Mr. Ailes didn't address the sexual-harassment claims but told Mr. Murdoch, "I am proud that we have built Fox News and Fox Business channels into powerful and lucrative news organizations that inform our audience and reward our shareholders. I take particular pride in the role that I have played advancing the careers of the many women I have promoted to executive and on-air positions."

Mr. Ailes will get an exit package worth more than $40 million, according to a person familiar with the matter, and will be a consultant for Mr. Murdoch. Mr. Ailes's agreement includes a noncompete clause that prohibits him from starting a competing video product, the person said.

In what some present said was an emotional meeting, Mr. Murdoch addressed staff in the Fox newsroom in Midtown Manhattan on Thursday.

"Roger has made a remarkable contribution to our company and our country, " he told them. "[He] shared my vision of a great and independent television organization and executed it brilliantly over 20 great years."

The departure of Mr. Ailes from Fox News is a stunning fall for one of the most powerful men in media and politics.

A former top adviser to Republican presidents Richard Nixon, Ronald Reagan and George H.W. Bush, Mr. Ailes launched Fox News in 1996 with Mr. Murdoch, and brought deep ties to the Republican establishment. Winning over Fox News and Mr. Ailes was a must for any Republican candidate seeking major office.

In founding Fox, Messrs. Murdoch and Ailes were united in their disdain for the existing news media, which they argued exhibited persistent liberal bias. In his remarks to staff on Thursday, Mr. Murdoch said that Mr. Ailes's "grasp of policy and his ability to make profoundly important issues accessible to a broader audience stand in stark contrast to the self-serving elitism that characterizes far too much of the media."

Six years after its founding, Fox News had toppled CNN as the most-watched cable news outlet.

"For Fox News, it is like losing a parent," said Jon Klein, a former CNN president who spent years going head-to-head against Mr. Ailes.

Mr. Ailes's permanent successor will face some long-term challenges. Fox News has a relatively old audience -- most of its prime-time viewers are over 65 years old. Winning over the younger demographics that are most appealing to advertisers could require some significant changes in its programming and talent.

Fox News also must adapt to changing consumption habits, as viewers begin to demand more ways to access content on digital platforms. 21st Century Fox CEO James Murdoch, a son of Mr. Murdoch, is pushing the whole company to step up its game in digital distribution and advertising technology.

Names mentioned as potential successors for Mr. Ailes include Bill Shine, who oversees the network's non-news and opinion content; Jay Wallace, who runs news programming; Michael Clemente, head of specials; New York Post Publisher Jesse Angelo; and Christopher Ruddy, the chief executive of the conservative news website and channel Newsmax and a former New York Post reporter.

A Fox News spokeswoman didn't respond to a request to make Messrs. Shine, Wallace and Clemente available for comment. Mr. Ruddy said it was "an honor to be mentioned" but said he is "very happy" at Newsmax. Mr. Angelo didn't respond to a request for comment.

The controversy that led to Mr. Ailes's ouster began July 6, when Ms. Carlson, an 11-year veteran of Fox, filed her suit after her contract wasn't renewed on June 23.

Once considered untouchable in the Fox empire because of his close relationship with the elder Mr. Murdoch -- "no one makes him laugh like Roger," one Fox executive said -- Mr. Ailes was suddenly vulnerable.

James Murdoch and his brother Lachlan, who is co-executive chairman of Fox, were eager to move fast and remove a potential cloud from the company, a person close to the situation said.

Pressure mounted when other women came forward in media reports with similar claims against Mr. Ailes.

In a statement, lawyers for Ms. Carlson said her "extraordinary courage has caused a seismic shift in the media world. We hope that all businesses now understand that women will no longer tolerate sexual harassment and reputable companies will no longer shield those who abuse women." They declined to make Ms. Carlson available for comment.

In a joint statement, Lachlan and James Murdoch said, "we continue our commitment to maintaining a work environment based on trust and respect."

Mr. Ailes's imprint is all over Fox News, media executives say. When watching audition tapes of anchors and reporters, Mr. Ailes would sometimes keep the sound off, people who worked with him say. He would then decide whether a viewer would be interested enough to turn up the volume.

Some in the media world are looking forward to changes at Fox News. William Kristol, editor of The Weekly Standard, a conservative magazine that used to be owned by Wall Street Journal parent News Corp, said while Mr. Ailes is a "TV genius" and "very shrewd about who to have on and where to sit the pretty young women and all that nonsense," his influence has been overblown after a "cult of personality" grew around him.

In Mr. Ailes's wake, Mr. Kristol hopes to see "more arguing, less bullying."

--Kristina Peterson contributed to this article.

Write to Joe Flint at joe.flint@wsj.com

(END) Dow Jones Newswires

July 21, 2016 20:51 ET (00:51 GMT)

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